Operational Rules for the Mediation of Transaction Disputes of China Southern United Assets & Equity

2019-10-21

Article 1 These Rules are formulated in accordance with the Measures for the Supervision and Administration of the Transaction of the State-owned Assets of Enterprises, the Operational Rules for the Transaction of State-owned Properties of Enterprises, the General Transaction Rules of Southern United Assets & Equity Exchange and the other applicable rules and regulations in order to ensure fair and timely mediation of transaction disputes, safeguard the legitimate rights and interests of the transaction subjects, and protect the normal operation order of the market.

Article 2 These Rules shall apply to the mediation of disputes involving the transaction of the properties of state-owned and collective enterprises handled at SUAEE. The dispute mediation involved in other types of transaction may be carried out with reference to these Rules.

Article 3 These Rules shall apply to the case that a party to the transaction or a third party that is interested in the transfer deems that, in the transaction carried out on the exchange market of SUAEE, the act of the counterpart of the transaction or any other relevant party involved in the transaction to violate transaction rules or affect the normal operation of the transaction and damage its legitimate rights and interests is under dispute, and thereby file SUAEE with an application for mediation or review.

Article 4 SUAEE shall carry out a mediation in a fair and reasonable independent manner on the premise of the voluntary participation by both parties, and in accordance with facts, laws and regulations, policies and regulations, and transaction rules of the exchange market.

Article 5 SUAEE shall implement the system final mediation of transaction disputes. After the mediation is over, if a party applies to SUAEE for mediating the same dispute, SUAEE will not accept such application.

Article 6 The mediation by SUAEE shall be not conducted in public. If the parties agree to conduct the mediation in public, with the consent of SUAEE, such mediation may be conducted in public, unless it is required to be kept confidential in accordance with the applicable regulations.

Article 7 The parties as mentioned herein shall refer to the applicant and the respondent of the mediation of transaction dispute.

The transaction subject or other relevant subject that applies for mediation or processing of the transaction dispute shall be the applicant while the other party claimed due to the dispute shall be the respondent.

Article 8 If a party participates in mediation, it must exercise its rights in accordance with the law and abide by the rules and order of SUAEE. That the parties agree to accept the mediation; or without the written agreement, but after the applicant applies for a mediation by SUAEE, the respondent participates in the mediation according to SUAEE notice shall be deemed that the parties agree to mediate in accordance with these Rules.

In the case where a party knows or should have known that any of the provisions of these Rules is not complied with, it shall file a written objection within reasonable time. The party failing to file a written objection or fails to continue to participate in the mediation process shall be considered waiving its right to file an objection and shall not use this as a defense against the non-performance of the mediation agreement.

Article 9 The parties shall have the right to entrust an agent to participate in the mediation.

If the transferor or the potential transferee has entrusted a member of SUAEE to act as a proxy, it shall submit the mediation application through the member and may entrust the member to participate in the dispute mediation; if the applicant is a stakeholder such as creditor, employee, etc., it may entrust the member or a law firm to participate in the dispute mediation. In the case where an entrusted agent is entrusted to participate in the dispute mediation, such entrusted agent shall provide the power of entrusted agent issued by the applicant.

If the application is submitted by the member, the entrusted member shall verify the application documents and provide the stakeholder with the services on the initialization and coordination of the mediation application according to these Rules.

Article 10 In the case where the authority or power of the entrusted agent is released, a party shall notify SUAEE in writing and then SUAEE shall notify the counterpart.

Article 11 The circumstances in which an application for mediation of transaction dispute can be filed with SUAEE mainly include:

(i) the dispute over the content of information released, transaction procedure, determination of potential transferees, choice of transaction mode, etc.;

(ii) the dispute that the transaction counterpart is involved in violation;

(iii) the dispute that the transaction counterpart acts or does not act intentionally, which damages the legitimate rights and interests of the applicant; and

(4) any other dispute that SUAEE consider to be acceptable.

Article 12 When a party applies to SUAEE for a mediation, it shall meet the following conditions:

(i) The applicant has a direct interest in the transaction dispute;

(ii) There must be a specific respondent;

(iii) There must be a specific claim, facts, and causes for the mediation; and

(iv) The dispute is within the mediation acceptance scope of SUAEE.

Article 13 When an applicant files an application for mediation of a transaction dispute, the following documents shall be submitted:

(i) the application for mediation of transaction dispute expressly accepting the mediation by SUAEE;

(ii) the supporting documents for the applicant's subject qualification;

(iii) the relevant supporting documents for the dispute; and

(iv) other documents that SUAEE believes need to be submitted.

The applicant shall be responsible for the authenticity, completeness, accuracy and legal validity of the submitted documents, and the entrusted agent shall verify the authenticity, completeness, accuracy and legal validity of the submitted documents and bear joint and several liability for such documents.

Article 14 During the mediation of a transaction dispute, the applicant may waive, change or withdraw the application for mediation in writing. SUAEE will terminate the mediation procedure after filing. After the applicant withdraws the application for mediation, it shall not file an application for mediation on the same dispute for the same reason.

The respondent may accept object to the application for mediation and shall have the right to make a counterclaim.

Article 15 SUAEE shall make the decision to accept or not accept the application for mediation of transaction dispute within 15 business days after receiving such application.

Article 16 In any of the following circumstances, the application for mediation of transaction dispute shall not be accepted. If it has been accepted, SUAEE shall have the right to terminate the mediation procedure:

(i)Where the application for mediation of transaction dispute does not meet the application conditions;

(ii) Where the arbitration institution or the people's court has accepted the dispute;

(iii) Where the dispute shall be settled by an administrative authority according to law;

(iv) Where the dispute has had an effective judgment, ruling, arbitral ruling, administrative handling decision, etc. already; or

(v) any other application that SUAEE consider to be unsuitable for the mediation it.

Article 17 If a party considers that the mediator has a stake in the case or may affect the fair mediation of the case, it may request such mediator to evade from such case orally or in writing.

Article 18 If the mediator who presides over the mediation considers that he/she is not suitable for handling the case, he/she shall request evading from such case on his/her own. Whether the mediator shall evade from the case shall be determined by SUAEE.

Article 19 SUAEE may accept the application for mediation filed by the applicant, shall investigate and verify the dispute and organize the involved parties to mediate the dispute in accordance with these Rules.

Article 20 If SUAEE organizes the involved parties to mediate the dispute, it may decide to mediate the dispute orally, or by holding a mediation meeting, etc..

Article 21 If a mediation meeting is adopted, the mediator shall notify the parties of the time and place of the mediation meeting three days in advance.

For proper reasons, a party may request the postponement of the meeting. Whether it is postponed or not shall be determined by SUAEE.

Article 22 If the applicant fails to attend the mediation meeting without justifiable reasons or withdraws from the mediation meeting without the permission of SUAEE, it will be deemed that the applicant has withdrawn the application for mediation.

If the respondent has been notified in writing but fails to attend the mediation meeting or withdraws from the mediation meeting without justifiable reasons or without the permission of SUAEE, it will be deemed that the respondent is unwilling to continue mediation or the mediation has failed.

Article 23 In the process of mediation of a transaction dispute, the applicant and the respondent shall abide by these Rules and bear the burden of proof for the request or claim, shall truthfully state the facts, shall not provide false supporting materials nor conceal or forge evidence.

Article 24 If a party fails to provide relevant evidence in accordance with the requirements of SUAEE, it will bear the responsibility of failing to provide evidence.

If the applicant fails to provide evidence within the prescribed time, it shall be deemed to have waived the dispute mediation application.

Any evidence shall be presented at the start of the mediation meeting. The parties may challenge the validity of such evidence.

Article 25 SUAEE shall, on the basis of verifying the relevant documents submitted by the applicant and related matters, strive to facilitate the parties to resolve their contradictions.

Article 26 The parties may propose a mediation plan on their own, and the person presiding over the mediation may also propose a mediation plan for the parties to consult.

Article 27 If the disputed matter does not involve the interests of the third party, and both parties to the dispute accept the mediation, with SUAEE as witness, the parties to the dispute may reach a consensus through consultation and then enter into a mediation agreement. After the parties shall sign and seal on the agreement for confirmation, the mediation procedure will be completed.

Article 28 The transaction dispute mediation agreement shall include the following main contents:

(i) the basic information such as the name, address and legal representative of the applicant and the respondent;

(ii) the disputed matter and the claim;

(iii) the process of the investigation and verification and the facts;

(iv) the facts, evidence and relevant basis for mediation determination;

(v) the mediation opinion; and

(vi) the agreement between the parties on the implementation of the mediation opinion and breach responsibilities.

Article 29 Where a transaction dispute involves a third party, a third party shall be notified to participate in the mediation. If the result of the mediation involves the interests of a third party, the third party's consent shall be obtained. If the third party does not agree with the mediation, the mediation shall be terminated.

Article 30 After the acceptance of a transaction dispute mediation application, if the mediation fails or the parties are unwilling to continue the mediation, SUAEE shall file the disputed facts and documents, and shall have the right to decide whether to issue mediation opinions as appropriate.

In case of a dispute involving transaction contract, if the mediation fails or the parties are unwilling to continue the mediation, SUAEE shall inform the parties to apply for arbitration or file a lawsuit in accordance with the transaction contract.

Article 31. The parties shall perform their own obligations pursuant to the contract and mediation agreement, and shall not unilaterally modify or rescind the mediation agreement.

Article 32. If a party violates the rules and the applicant or the respondent refuses to perform the dispute mediation agreement, which affects the normal operation of the transaction, resulting in economic losses of SUAEE or the related parties of the transaction, such party or the applicant or the respondent shall be liable for compensation for the relevant economic losses.

If the faulty party is the potential transferee who has submitted the security deposit, such losses can be deducted from the security deposit. If the faulty party is the transferor who requests the potential transferee to submit the security deposit, it shall bear the liability for damages the same amount as the security deposit.

Article 33 These Rules shall be interpreted by SUAEE.

Article 34 These Rules shall be filed with the Office of Guangdong Provincial Government Joint Meeting on the Construction of Market of Equities and shall be subject to the supervision and guidance of Guangdong Provincial Government Joint Meeting on the Construction of Market of Equities and its Office.

Article 35 These Rules shall come into force on January 1, 2017, and the Operational Rules for the Mediation of Transaction Disputes of Southern United Assets & Equity Exchange (Amendment 2014) shall be abolished from the implementation date of these Rules.

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